The weighted average yield on securities available for sale for fourth quarter2008 decreased 61 basis points to 4.65 from 5.26 for the same period lastyear. The variablerate agency CMO portfolio was $111 million at December 31, 2008, compared to $88million at the prior year-end. The weighted average cost of deposits for fourth quarter 2008 decreased 111basis points to 2.74 from 3.85 for the same period last year. The cost of timedeposits decreased 195 basis points to 3.16 from 5.11, contributing to asubstantial portion of the decrease. The weighted average cost of FHLB advances for fourth quarter 2008 decreased 67basis points to 3.65 from 4.32 for fourth quarter 2007, reflecting the declinein market interest rates. Following are the weighted average data at December 31, 2008 and 2007: December 31, 20082007 Weighted average loan portfolio yield (excluding discounts) 6.148.01 Weighted average securities available-for-sale portfolio yield4.085.37 Weighted average cost of deposits 2.593.74 Weighted average cost of total interest-bearing deposits3.074.68 Weighted average cost of FHLB advances3.704.16Sequentially, fourth quarter 2008 net interest income before provision for loanlosses decreased $2.1 million, or 8, from third quarter 2008. The decrease wasprimarily attributable to a decline in net interest margin resulting from ratecuts of 175 basis points by the Federal Reserve during the quarter.
The netinterest margin decreased 31 basis points to 3.71 for fourth quarter 2008 from4.02 for third quarter 2008. Average interest earning assets decreased by $11million and average interest-bearing liabilities increased by $5 million duringfourth quarter 2008. Interest income reversed for non-accrual loans (net of income recognized) was$283 thousand, $182 thousand, and $273 thousand for fourth quarter 2008, fourthquarter 2007, and third quarter 2008, respectively. Excluding this effect, thenet interest margin for fourth quarter 2008, fourth quarter 2007, and thirdquarter 2008 was 3.75, 4.46 and 4.07, respectively. Fourth quarter 2008 non-interest income was $2.1 million, adecrease of $3.9 million, or 66 compared to fourth quarter 2007.
The decreaseis due to a decline in net gains on sales of SBA and other loans, lossrecognition of $1.0 million on sales of other real estate owned ("OREO") and aloss of $834 thousand due to a net mark to market valuation of interest rateswaps. Net gains on sales of SBA and other loans were $87 thousand for fourth quarter2008, a decrease of 95 from $1.7 million for fourth quarter 2007 There were nosales during fourth quarter 2008. During fourth quarter 2007, the Company had net gains of $588 thousand onthe sales of SBA loans and $1.1 million on the sale of other loans. Sequentially, non-interest income decreased 49 from third quarter 2008.